What can a court do to the terms of the Chop5 Salad Kitchen agreement if it deems necessary?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
"Restricted Territory" means: the geographic area within: (a) a 10-mile radius from your Restaurant (and including your Restaurant's premises itself); and (b) a 10-mile radius from all other Restaurants that: (i) are operating or under construction as of the Effective Date; (ii) remain in operation or under construction during all or any part of the Post-Term Restricted Period; and (iii) are located in any state in which you or your affiliate operates (or operated) a Restaurant; provided, however, that if a court of competent jurisdiction determines that the foregoing Restricted Territory is too broad to be enforceable, then Restricted Territory means: the geographic area within: (a) a five (5) mile radius from your Restaurant (and including your Restaurant's premises itself); and (b) a five (5) mile radius from all other Restaurants that: (i) are operating or under construction as of the Effective Date; (ii) remain in operation or under construction during all or any part of the Post-Term Restricted Period; and (iii) are located in any state in which you or your affiliate operates (or operated) a Restaurant.
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to the 2024 Chop5 Salad Kitchen Franchise Disclosure Document, a court may modify the restricted territory outlined in the agreement if it is deemed too broad to be enforceable.
Specifically, the standard agreement defines the "Restricted Territory" as the geographic area within a 10-mile radius of the franchisee's restaurant and all other Chop5 Salad Kitchen locations operating or under construction in the same state. However, if a court finds this 10-mile radius to be too broad, the agreement stipulates that the "Restricted Territory" will be reduced to a 5-mile radius from the franchisee's restaurant and other Chop5 Salad Kitchen locations.
This clause provides a safeguard for the franchisee, ensuring that the non-compete agreement is not overly restrictive. Courts often scrutinize non-compete clauses to ensure they are reasonable in scope and duration, balancing the franchisor's need to protect its brand with the franchisee's ability to earn a living after the franchise relationship ends. The inclusion of this provision demonstrates that Chop5 Salad Kitchen has considered the potential for judicial review and has built in a mechanism to adjust the restricted territory to a more reasonable size if necessary.